House clears farm bill

Given up for dead just months ago, a new five-year farm bill easily cleared the House Wednesday morning, and the Senate hopes to send it onto President Barack Obama early next week.

Resistance has largely collapsed given the strength of the House’s 251-166 vote. Soon after the bill papers arrived Thursday, Senate Majority Leader Harry Reid (D-Nev.) filed cloture with the vote set for late Monday. Assuming that proponents get the required 60 votes then, the vote on final passage will come at 2:15 p.m. Tuesday Reid announced.

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Filling hundreds of pages, the giant measure combines a landmark rewrite of commodity programs with bipartisan reforms and savings from food stamps. It caps years of struggle spanning two Congresses, a political saga largely ignored by the national media and White House but one that fractured the old farm and food coalition as never before.

Given this history, the breadth of support in the House Wednesday was all the more striking. Republicans, including Budget Committee Chairman Paul Ryan (R-Wis.), backed the measure 162-63. A narrow majority of Democrats opposed the bill, but among the 89 who backed the measure were the party’s very top leaders, including Minority Leader Nancy Pelosi (D- Calif.), Minority Whip Steny Hoyer (D-Md.) and Rep. Jim Clyburn (D-S.C), the assistant Democratic leader.

“This has been a long and seemingly epic journey,” said House Agriculture Committee Chairman Frank Lucas (R-Okla.) in opening the debate. “Good men and women, of different opinion, working to get to a final product.”

Reformers came away frustrated by the bill’s failure to rein in crop insurance subsidies and impose a more meaningful cap on what any single farm can receive in government aid. “This bill is woefully short of what’s needed,” said Rep. Ron Kind (D-Wis.).

But the measure has won high praise from wildlife and land conservation groups. At one level, it’s almost a coming of age for growers of organic foods and goes much further than past farm bills in opening the door to specialty crops and cattle ranchers — two priorities for Stabenow and Lucas.

“These are landscape changes,” said Dan Wrinn, director of public policy for Ducks Unlimited, citing new conservation provisions that would employ crop insurance subsidies as a lever to better protect prairie grass and wetlands.

“Of course it’s not perfect. If you want perfect, you’ll get that in heaven,” said Rep. Tim Walz (D-Minn.). “This place is closer to hell, so this is a pretty good compromise that we have come up with.”

Factoring in cuts already begun during the two-year debate, the package should generate about $23 billion in 10-year savings, a third of which is attributed to the nutrition title. But any such budget estimates — high or low — must be viewed cautiously because of the drop in corn prices since last spring.

From a policy standpoint, the single biggest decision in the bill is to end the nearly 18-year-old system of direct cash payments to farmers, which cost more than $4.5 billion annually and go out at a fixed rate — whatever a farmer’s profits or even if he hasn’t planted crops.

Instead, producers will have to make a choice in the next few months between two options linked to real market losses.

The first, known as Agriculture Risk Coverage and favored by the Senate, promises early but temporary assistance to growers faced with a downward cycle of prices.

Payments would be triggered once prices fall 14 percentage points below the prior five-year average. But the subsidy covers only a narrow 10-point band — from 86 percent to 76 percent of revenues — and will fade after several years if prices don’t improve.

The second choice, Price Loss Coverage, fits the more classic countercyclical model of fixed, government-set target prices — not a rolling five-year average.

PLC payments would typically be triggered later in a market downturn but then promise a more permanent floor to cover a farmer’s production costs — a major priority for Lucas.

Estimates released Tuesday evening by the Congressional Budget Office project that the combined cost of the two alternatives at $27.2 billion — substantially more than the House had wanted last spring. And the cost of ARC — which was heavily promoted by the corn and soybean lobby, could very well grow since corn prices have already dropped well below the assumptions used in CBO’s baseline.

The other side of this coin is that lower market prices will also reduce the required subsidies for crop insurance, since farmers will be buying protection for a lowered valued crop.